Nick Cater has mixed feelings about the prospect of charity funding through social investment bonds.

The Good, The Bad and The Ugly should be the alternative title for the story of the £5m social investment bond launched recently to fund a pilot programme of intensive support for ex-prisoners, with a government-funded potentially whopping return of up to 13 per cent from savings made by lowering recidivism rates.

Good because the bond offered by the firm Social Finance could attract new and larger streams of funding to tackle tough and unpopular problems, generate investment in charities from the private sector, reward measurable results, foster innovation, encourage better organisational performance and provide that useful yet elusive bottom line for non-profits.
 
Bad because this bond, just like foundation grants and public donations, is not "new" in finding better ways to prioritise and meet needs but is part of the same old supply-driven beauty contest that too easily responds to trends and fashions while ignoring unpopular and difficult causes, and - unless £5m is easily available from other sources - risks leaving the charities involved high and dry if the bond is a failure.
 
Bad, too, for the bond is a symptom of a funding environment in which metrics are given a growing role, so what can be measured will be measured, and what cannot be measured - the qualitative work that is at the heart of much of the voluntary sector, especially as it tries to meet the needs of people that lie beyond market mechanisms - will increasingly not matter and may receive even less funding.
 
And ugly because the bond addresses symptoms not causes: the flaws of the penal system, the failure of government to tackle poverty, deprivation and despair, the lack of reform of the drug laws - addiction drives vast amounts of burglary and theft - and the nature of an economic system reliant on greed, debt, and ever-rising consumption that fuels criminality.